With Starbucks’ announcement that it will closing 600 of its locations nationwide, the network morning shows on Wednesday heralded this news as another sign of a bad economy. ABC’s Bianna Golodryga on "Good Morning America" lamented that "Americans are struggling just to pay for a cup of Starbucks coffee." NBC’s Matt Lauer’s clever headline: "Trouble brewing -- Starbucks announces its closing 600 stores in the next year. Is the demand for $4 lattes dying in a tough economy?"
But CBS’s "The Early Show" took the puns and the "doom and gloom" to a new level. Host Maggie Rodriguez teased the headline news: "Starbucks shutting its doors on hundreds of stores. Tough economic times or just a grande letdown?" Correspondent Ben Tracy, in his report on the closings, quipped, "The economic slowdown has been a real grind for Starbucks' profits. After filling up their gas tanks, some coffee lovers don't have enough left to fill up their cups."
Tracy began his report, which began six minutes into the 7 am Eastern hour with another coffee reference, that "[t]he now ubiquitous green coffee giant has decided its time to decaffeinate itself." He then detailed Starbucks’ plan and used a sound bite from a professor who attributed part of the problem to the company becoming "too big." He followed this with his "gas tanks" line.
TRACY: The company already planned to shed 100 of its stores. Now it will close a total of 600 underperforming outlets in the coming months, cutting up to 12,000 of its workers. USC marketing professor Lars Perner says Starbucks became too big just as consumers cut back.
LARS PERNER: I think these 600 may be just the beginning of the ones to come. They may have to close even more of them over time.
TRACY: The economic slowdown has been a real grind for Starbucks profits. After filling up their gas tanks, some coffee lovers don't have enough left to fill up their cups.
RACHEL PRESTON: People are spending less money on coffee because there's more important things to spend their money on, like gas.
TRACY: Starbucks CEO Howard Schultz, recently brought back to reinvigorate the company, said in a statement that closing the stores is 'the most angst-ridden decision' he has made in his more than 25 years with Starbucks. But the company says this is part of its plan to return Starbucks to its roots and win back customers. Which also includes the recently launched Pike Place Roast, named after Starbucks' first location in Seattle. If you're starting to worry about getting your Starbucks fix, don't. Despite these store closings, there are still more than 10,000 Starbucks left to keep you caffeinated. Ben Tracy, CBS News, Los Angeles.
Golodryga’s "Good Morning America" report underlined the importance of the economy as an issue in the general election, and used the Starbucks closures as "just the latest sign of an economy in trouble." The following is the transcript of the beginning of the report, which aired near the top of the 7 am Eastern hour:
DIANE SAWYER: ...Tuesday, Starbucks announced that it is shutting down hundreds of coffee shops across the country in the wake of disappointing sales, as families, of course, wrestle with far more central and important struggles. But will this election deliver the answers? We're going to be talking to John McCain, Senator McCain, in just a moment. But first we'll turn to ABC's Bianna Golodryga. Bianna?
BIANNA GOLODRYGA: Good morning, Diane. It is just the latest sign of an economy in trouble. While Wall Street is struggling to remain profitable, Americans are struggling just to pay for a cup of Starbucks coffee. Now, the presidential candidates say that they know how to help, but, of course, as always, actions speak louder than words. With corporate icon Starbucks announcing Tuesday it's closing eight percent of its stores, 600 in all, the same day auto sales sunk 18 percent, and Wall Street teetered on the edge of a bear market, experts say the signs for the economy are troubling....
Besides Lauer’s "trouble brewing" line, "The Today Show" presented a more balanced explanation of the coffee retailer’s woes. Correspondent Amy Robach quoted author Karen Blumenthal, who had the same line of thinking as the expert on "The Early Show." She attributed the closures to Starbucks’ expansion of locations over the past few years, which "over-saturated the marketplace." But Blumenthal, in one of her two sound bites, couldn’t avoid using the word "recession."
The transcript of Robach’s report, which aired 12 minutes into the 7 am Eastern hour of "Today:"
ROBACH (voice-over): The coffee giant is in need of a pick-me-up. On Tuesday, the Seattle company announced it will be closing 8.5% of its U.S. company-operated stores by March of 2009.
UNIDENTIFIED MAN (outside a Starbucks): It's probably the sign of the times due to business and lack of.
ROBACH: With over 11,000 locations nationwide, the world's largest coffeemaker did not name specific Starbucks, but said the closings will be across all major U.S. markets.
KAREN BLUMENTHAL, AUTHOR, "GRANDE EXPECTATIONS:" Starbucks used to think they were recession-proof, that nothing could affect their sales.
ROBACH: The author of 'Grande Expectations' says the company over-saturated the marketplace.
BLUMENTHAL: And I think they probably opened up too many stores, especially, given what's happened in the economy in the last year or two.
ROBACH: What some have called the 'latte index' has crashed as consumers cut back on name-brand coffee.
UNIDENTIFIED FEMALE (outside a Starbucks): I don't think use the Starbucks as much as I used to.
ROBACH: Also facing tough competition from Dunkin' Donuts and McDonald's, Starbucks' spokesperson said 70% of the underperforming locations to be closed are stores opened since 2006, during the company's rapid expansion.
HOWARD SCHULTZ, STARBUCKS CEO: I think very few things in America that have gotten big have stayed good. I think that's true. We're very mindful of that.
ROBACH: Last year, the CEO of Starbucks, Howard Schultz, defended the company's unprecedented growth.
SCHULTZ: We can get big and stay small, and, I think, embraced the heritage and the tradition of traditional coffeehouse.
ROBACH: Starbucks' stock has lost 48% of its value since 2006. Forced to brew a new business plan, the company also plans to turn 7% of its work force.